Senate Confirms Trump Trade Pick, Clearing Way for NAFTA Overhaul

Robert Lighthizer, a former Reagan-era trade official, is seen as too protectionist by some key Republicans, who refused to back him.

Robert Lighthizer, nominee for US Trade Representative, speaks at the Senate Finance Committee full hearing on the nomination of the U.S Trade Representative in Washington, DC March 14, 2017. / AFP PHOTO / Tasos KATOPODIS (Photo credit should read TASOS KATOPODIS/AFP/Getty Images)

President Donald Trump’s nominee for U.S. trade representative cleared the Senate on Thursday, paving the way for talks to revamp the North American Free Trade Agreement in August.

Veteran steel-industry lawyer and free trade skeptic Robert Lighthizer won confirmation on a 82-14 vote, with three Republicans refusing to back him due to his protectionist views.

The opposition was a rare break in party unity over a cabinet nominee. It underscores the rupture between the Republican establishment and the Rust Belt voters swayed by Trump’s vows to overhaul America’s trade relationships and prop up heavy industry.

Lighthizer takes the reins of the trade representative’s office more than four months after he was nominated for the job — and in the midst of a roller-coaster ride for U.S. trade policy.

Industry officials, farmers, and even America’s trade partners have been whipsawed by Trump’s various pronouncements, shifts, and reversals on major trade matters since his election. But absent a confirmed trade representative, Trump has been effectively blocked from pursuing major parts of his agenda, including reopening talks on NAFTA.

Even critics of America’s lurch toward protectionism are relieved Trump will finally have his trade team intact, which they said would allow the administration to start negotiations with trade partners.

From Mexico’s perspective, “the Lighthizer news is excellent news,” said Antonio Ortiz-Mena, a senior advisor at the Albright Stonebridge Group who served as the Mexican Embassy’s top economic affairs official in Washington.

He said the cloud of uncertainty over NAFTA has pushed down the value of the Mexican peso, even causing it to plunge sharply last month when Trump threatened to withdraw from the pact altogether. A depressed peso has widened America’s trade deficit with Mexico by making U.S. exports to Mexico more expensive — the very opposite of what the administration hopes to achieve by renegotiating the pact.

“It is the U.S. government that is affecting the dollar-peso exchange rate,” Ortiz said.

Upon confirmation, Lighthizer is expected to move quickly to notify Congress of Trump’s intent to reopen NAFTA, kicking off a 90-day consultative period with lawmakers before the talks can begin. That would set up an August start date for the negotiations, for which both Canada and Mexico have been prepared for months.

The administration could have notified Congress earlier about reopening NAFTA. But key lawmakers, who want to exert maximum leverage over the talks and whose buy-in is needed to pass trade deals, said they only wanted to consult with the confirmed trade representative, not the acting official currently serving in the role. Meanwhile, Lighthizer’s confirmation was held up amid a lack of agreement over a waiver Democrats said he needed because of his past work for foreign governments.

“They really want to set it up in conjunction with Lighthizer, and they want to have the upper hand,” Gary Hufbauer, a trade expert at the Peterson Institute for International Economics, said.

A Reagan-era deputy U.S. trade representative, Lighthizer is seen by many trade experts as a seasoned practitioner with protectionist leanings and a soft spot for heavy industry. They expect him to pursue a harder line on what he sees as predatory trade behavior, particularly by China, but to avoid upending the global free trade order. As such, he may serve as a counterpoint to other members of the White House economic team who hold more radical views, such as trade advisor Peter Navarro.

“He’s not a protectionist. He’s an old trade lawyer, an old warrior,” said Charles Roh, who served as the deputy chief negotiator for NAFTA. “He thinks the international rules should be tougher.”

Still, some Republicans worry he will steer the United States down a protectionist path. Sens. John McCain of Arizona and Ben Sasse of Nebraska announced Wednesday they wouldn’t support Lighthizer, citing his “vocal advocacy” for protectionist policies. They said he failed to convince them that he understood the economic benefits of NAFTA.

“We fear that you do not have an appreciation for the millions of jobs created by this free trade deal, and that you would not champion agriculture,” the senators wrote in a letter to Lighthizer that they released Wednesday.

Sen. Corey Gardner (R., Colo.), in a statement, said he couldn’t back Lighthizer “because I’m afraid his policies could hurt Colorado’s farmers and ranchers.”

Lighthizer argued years ago that modern free trade orthodoxy doesn’t have deep roots in the conservative movement and faulted so-called free traders within his party for being too dogmatic — including McCain. At his confirmation hearing in March, he said he subscribed “completely” to the administration’s “America First” agenda, which aims to snatch back factory jobs from China, Mexico, and other large trading partners.

Meanwhile, he spent years in private practice arguing cases for the steel industry that sought duties and other remedies aimed at insulating the sector from import competition.

At the March hearing, Lighthizer advocated a tougher approach to reining in Chinese trade abuses, and he suggested the World Trade Organization wasn’t equipped to deal with Beijing. “I don’t believe the WTO is set up to deal effectively with a country like China and their industrial policy,” he said.

But he managed to assuage concerns of many farm state Republicans and the business community that he would pursue moves that could set off trade wars or hurt American exports. He told senators that he would prioritize U.S. agriculture — which has averaged $140 billion in exports since 2010 — and assured them Trump didn’t intend to hurt any of the “winners” from NAFTA. He passed the Senate Finance Committee on a unanimous vote.

Apart from NAFTA, Lighthizer will have to contend immediately with spats over Mexican sugar and Canadian softwood lumber imports that have flared anew as the administration has pursued a harsher tone with America’s neighbors. The United States slapped a tariff on imports of Canadian softwood lumber last month, after negotiations stalled in the long-standing dispute.

Lighthizer will also likely be tasked with reopening the South Korea Free Trade Agreement that just entered into force in 2012 and pursuing bilateral deals with other trading partners — an approach Trump prefers over multilateral deals, which he believes have given the United States a raw deal.

The agriculture sector is particularly anxious for the administration to get going on negotiations to expand exports. It was poised to gain significantly from the 12-nation Trans-Pacific Partnership that Trump threw overboard when he took office. Now farmers are worried they will lose ground in Mexico, their third-largest export market, as Trump’s harsh rhetoric on NAFTA and the border wall has prompted Mexican officials to pursue a flurry of trade visits to Asia, South America, and Europe to diversify its food supply.

“It’s kind of hard to watch on the sidelines as the rest of the world continues to pursue trade agreements,” Kent Bacus, the director of international trade for the National Cattlemen’s Beef Association, said. “A lot of things we can’t afford to wait any longer on.”